Opening a company by Polish citizen in Lithuania (part 1/3)
Lithuania offers great incentives to incorporate for the Polish. Double Taxation Avoidance Agreement signed between Lithuania and Poland includes possibilities of 5% tax on dividends and tax exemption for personal income. Additionally, Research and Development is highly encouraged in Lithuania as firms can deduct R&D expenditures 3 times. Moreover, 5% Corporate Income Tax is possible for the small firms with an annual income of 300,000 EUR or less.
The most common form of a business presence in Lithuania is a limited liability company (UAB). The minimum share capital required to establish a UAB is 2500 EUR. The capital shall be paid when the company bank account is opened, before a company registration in the Commercial Register. UAB may be founded by natural person as well as legal person (company). Additionally, Polish resident incorporating in Lithuania can make use of Lithuanian-Polish Double Taxation Avoidance Agreement.
Company formation cost including bank account and VAT registration
State fee for registering UAB (private limited liability company) is 57,4 EUR. State fee does not include notary fees which varies from 100 EUR to 250 EUR. There is no state fee for registering as VAT payer in Lithuania.
The cost of opening a bank account slightly varies on the particular bank. In case a company is incorporated by legal person (company) there might be additional costs for translation services (approximately 20 EUR per/100 words). We can assist you in opening a bank account via power of attorney. No physical presence of a shareholder (establisher) is needed.
The registration takes 5 business days from the submission of documents at local authorities.
Obligation to register VAT occurs when the turnover of the company exceeds 45 000 EUR in 12 consecutive months. It is allowed to register also, when the turnover is under that amount, however, then the company must have actual taxable business activity in Lithuania. In case VAT registration is not done when the company exceeds 45 000 EUR turnover, the company shall pay interest for late VAT payments.
Please note that it is necessary to indicate the legal address of the company. Therefore, the registration at particular premises in Lithuania is necessary at the initial step. For your convenience we may offer to use our firm’s legal address in Vilnius.
Required documents and information:
1. Data on the company director and the board members (names, surnames, identification numbers, dates of birth, residence addresses and passports copies); Data on the establisher of the company (in case if the establisher is the legal person (company) - extract from Commercial Register on the company;
2. Economic activity of the company;
3.Name of the company;
4.The amount of share capital (if different than 2500 EUR);
5. Legal address of the company in Lithuania (we can offer our firm’s address in Vilnius);
6. Information on the Bank preferences (most of the Nordic banks have their branches in Lithuania).
The company is deemed to have been established upon registration thereof in the Commercial Register.
All the documents must be submitted to Center of Registers in Lithuanian language. According to local laws, the translation of documents can be made only by the certified translator.
Minimum share capital
The minimum share capital required to establish a limited liability company (UAB) is 2500 EUR which shall be paid before a company registration with the Commercial register when the company bank account is opened. An UAB may be founded by natural person as well as legal person (company).
Regarding mandatory VAT registration please note that the threshold is 45 000 EUR during taxable period (12 months). Please also note that the goods or services provided in the invoice shall be supplied in Lithuania. When it comes to goods, it means that the goods shall be physically in the territory of Lithuania (released to the market in Lithuania). Storage in customs warehouses do not qualify.
Once the threshold if 45 000 EUR is exceeded, there is an obligation to register as VAT payer in Lithuania. Information about business conducted in Lithuania shall also be provided to the Tax Inspectorate, along with the names of business partners, key contacts, warehouses, administration offices, logistic companies and etc.
We can assist you in the opening of the bank account.
Bank accounts are subject to bank scrutiny and some real business shall be present.
Should you have any questions about opening a company in Lithuania, please do not hesitate to contact our English speaking lawyers firstname.lastname@example.org.
T: +371 67 24 00 90
F: +371 67 24 00 91